Meat Packers Win Favorable Court Ruling

The U.S. Court of Appeals for the Fifth Circuit this week issued an opinion by a 9-7 vote in Wheeler v. Pilgrim's Pride Corp., holding that, in order to establish a claim under Sections 202(a) or 202(b) of the Packers and Stockyards Act (PSA), a plaintiff must demonstrate that the challenged practice has an anticompetitive effect.

The court ruled that plaintiffs must show that the challenged practice adversely affects or is likely to adversely affect competition. A divided panel of the Fifth Circuit had previously held by a 2-1 vote that a plaintiff need not demonstrate an anticompetitive effect in order to establish a claim under Sections 202(a) or 202(b). In holding today that an anticompetitive effect is required, the Fifth Circuit joins numerous other circuits that have reached the same conclusion.

The issue whether the PSA requires a showing of anticompetitive effect is of enormous importance to the poultry and meat packing industries. If an anticompetitive effect were not required to establish a PSA claim, liability under the PSA would be virtually limitless. The en banc court's ruling is, therefore, a significant victory for the poultry and meatpacking industries.

The plaintiffs in Wheeler have the opportunity to seek review of the Fifth Circuit's decision before the U.S. Supreme Court. A petition for certiorari would be due in 90 days, unless plaintiffs seek and obtain an extension.